Asia Pacific is a truly dynamic and forward-thinking region when it comes to corporate treasury. This was highlighted once again at the Adam Smith Awards Asia 2017 Gala Presentation Lunch when the best and the brightest in the region came together to celebrate their success.
Recent years have been especially challenging for treasury professionals around the world. Unpredictable political events, market volatility, rapid technological change and evolving regulatory regimes are just a few of the trials that treasurers have had to overcome. And all of this is taking place against a backdrop of increasing cost pressure and an ever-expanding role.
Those teams that picked up an Overall Winner or Highly Commended Winner award this year should therefore be especially proud of their achievements. And what is particularly notable is that many treasury teams in Asia are moving beyond simply trying to drive efficiency gains and process improvements within the silo of the treasury department; instead, they are reaching out into the business, acting strategically and helping increase profitability.
The Adam Smith Awards Asia recognises this work and over the past four years has gained a reputation for being the leading treasury awards programme in the region. This year we received over 200 submissions and the quality of the nominations was the highest that we have seen, showing remarkable creativity, resilience, collaboration, determination, teamwork, innovation and sheer hard work.
Commenting on the awards and the success of our winners, Sophie Jackson, Associate Group Publisher, Treasury Today Group says: “The 2017 Adam Smith Awards Asia Gala Presentation Lunch was a fine display of the region’s best and brightest corporate finance talent. It is wonderful to see that within the four years that the programme has been launched in Asia, it has become the regional industry benchmark for corporate excellence. I would like to offer my sincere congratulations to all of this year’s winners and to thank everybody who has been involved in the programme to date.”
Time to celebrate
To celebrate their success, all the winning corporates and their banking and technology partners were invited to the prestigious Four Seasons Hotel in Singapore for the 2017 Adam Smith Awards Asia Gala Presentation Lunch on Monday November 13th.
The record number of attendees who had travelled from right across the region filled the venue and there was a distinct excitement in the air as old friends and colleagues reconnected and shared stories of their success.
After a vibrant networking session, John Nicholas, Research Director at Treasury Today Group formally opened the event by welcoming all attendees and commenting on the great work of the corporate winners. “2017 really has showcased the Asia Pacific region’s ability to overcome ever-increasing challenges and an Adam Smith Award is justifiably recognised as the ultimate industry benchmark for corporate treasury best practice,” he said.
Following lunch, it was time for the crystal awards to be presented by Associate Group Publisher, Sophie Jackson, and Editorial Manager, James Hayward. The pride that accompanies such recognition was clearly visible on the faces of each winner and images of their awards were quickly being shared with colleagues, friends and family via social media.
It was Chinese technology giant, Lenovo, that took home the prestigious and highly-coveted Top Treasury Team Award for overall excellence. Lenovo’s multi-year project has seen it create a unique global treasury based out of Singapore to handle the complex operating model across its global footprint. The results are outstanding, resulting in significant cost savings, efficiency gains and a treasury well placed to better support Lenovo’s business both now and in the years ahead.
In more detail, Lenovo has worked hard across four key pillars:
Lenovo wanted instant visibility over its cash flows and to be able to deploy its cash efficiently. To do this it has built a strong automated infrastructure for management of liberal currencies through an “against the sun” global sweep structure involving 16 countries and eight currencies. In emerging markets, more bespoke structures were put in place. Additionally, Lenovo has worked to enhance the return on cash by actively managing the global pool header account and deploying long-term cash for debt repayments and short-term cash in liquid money market schemes via an online tool. These structures have helped Lenovo in counterparty risk management, liquidity optimisation and added profit and loss of US$28m of interest income for the US$3bn cash under management.
Lenovo has been working to restructure its business offering and internal organisation, including corporate spin-off, diversification and ownership reform. These changes required the restructuring of all treasury touch points from new account opening, setting parallel liquidity structures, payment infrastructure, collections framework, cash flow reporting and many others. Lenovo underwent a vertical and horizontal integration with a sense of urgency, requiring front-to-back reorganisation from policy, process and systems perspectives. An important element of its success was the company’s model of being highly centralised, controlled and having a fully digitised execution.
“Winning this award is my greatest achievement in my career to date.”
Ariel Liu, Treasury Manager, Johnson Controls
Working capital efficiency
As Lenovo continues its global expansion and focus on restructuring, its need for working capital to support its business growth and deleveraging has grown considerably. Lenovo’s working capital management team adopted a targeted approach to focus on both sides of their balance sheet, reducing the sales cycle (DSO) and extending the payments cycle (DPO). These goals required tailored solutions to fund Lenovo’s working capital goals. Key solutions implemented in the last 18 months have resulted in incremental working capital efficiency of US$925m.
Capital structure and debt management
Lenovo’s team has been able to take advantage of its strong understanding of capital structure analysis and forecasting and an intimate knowledge of the capital markets to raise innovative and timely financing over the years. They currently manage a debt book of around US$3-4bn and tap various kinds of market instruments for financing the group’s funding and hedging requirements. Lenovo’s keen understanding of capital structure, funding requirements and capital markets, coupled with its ability to make quick decisions to take advantage of market conditions, have resulted in successive timely and successful capital market fundraisings.
All in all, the Lenovo team displays an art of distinctive change management with agility and speed. Their progress over the last 18 months, deploying complex solutions for working capital efficiency, has resulted in a net opportunity interest saving of US$60m and added to cash flow of US$2bn. Similarly, their drive for liquidity efficiency has resulted in US$28m of additional savings.
“It is a huge compliment and a fantastic achievement,” says Damian Glendinning, Group Treasurer at Lenovo. “I am especially pleased because it is for the team, I am very fortunate to have a great team that has been doing fantastic work for a long time and I am incredibly pleased that they are being recognised.”
Elsewhere, AIA Group collected the hotly contested Harnessing the Power of Technology Overall Winner award for its all-encompassing technology upgrade that has given it the ability to fundamentally alter how it manages its cash, allowing treasury to add increased value to the organisation and give it a competitive advantage in the region.
To do this, AIA has deployed SAP Cash and Liquidity Management and SAP Bank Communication Management, both of which have enabled it to replace legacy paper-based transactions and approvals with a modern system while improving the overall control environment. The adoption of SWIFT has also given AIA the ability to deploy best practice security and bank connectivity standards throughout Asia Pacific while retaining multiple global and local banking partners.
“Being an Adam Smith Awards Asia winner gives external legitimacy to what we have achieved and allows us to engage with our peers in the insurance industry and others on best practice sharing and further strengthens AIA as a leader in Asia,” says Gary Gray, Head of Treasury Operations at AIA.
Revolutionising trade finance
The Judges’ Choice award looks for something a little bit different and this year the award went to Maersk Trade Finance.
In an era marked by instant gratification through interfaces enabling immediate procurement of services (iTunes, Amazon and Uber), the world of global trade remains paper-heavy and procedure-intensive, characterised by disconnected processes. Maersk, however, has a unique position in the heart of the supply chain of many organisations and has built a digital solution that removes friction for its customers and provides them with new financing options when shipping with the company.
The ability to secure working capital alongside a logistics solution is imperative for global trade, so with this solution, Maersk brings to its customers the first ever single window for container logistics and trade finance. The overall aim for Maersk is to drag the world of trade into the 21st century for the benefit of all market participants.
“The true success of any start-up business is measured by hearing positive things from your customers and also receiving external recognition from something as prestigious as the Adam Smith Awards Asia,” says Vipul Sardana, Global Director of Trade Finance at Maersk.
Ariel Liu, Senior Treasury Analyst, Johnson Controls (JCI) was this year’s Rising Star. Within a short space of time, Ariel has become a pivotal part of the JCI treasury team. This is despite having to learn many treasury skills on the job.
Ariel’s most notable achievement to date has been her work leading the creation of a world-class cash management structure for a new multi-billion-dollar global joint venture with Hitachi. To assist her on this project, Ariel proactively began learning Japanese with the aim to communicate better with her Japanese counterparts from Hitachi. Elsewhere, Ariel led the integration work following JCI’s acquisition of Tyco. She also completed the request for proposal process for the JCH JV global banking relationship.
Commenting on her win, Ariel says that: “Winning this award is my greatest achievement in my career to date.”
Another chance to shine
As always, we challenge the treasury community in Asia to do better. This is what the Adam Smith Awards are all about: recognising the creativity and ingenuity of the treasury community, and in doing so, inspiring treasurers (and their banking and technology partners) to think creatively and develop even better and more innovative solutions.
The Adam Smith Awards Asia will be running again in 2018, with nominations opening in mid-June. We once again invite corporates of all shapes and sizes from across the region to take part and we look forward to receiving your submissions. In the meantime, you can read case studies from the Overall Winners and Highly Commended Winners in our yearbook and on our website.